Biodiesel sector jittery over imminent lapse of excise duty exemption

Biodiesel producers fear a hit on their bottomline as the excise duty exemption on the clean fuel will lapse on April 1.

The government had waived excise duty on inputs for biodiesel production in October 2015. The exemption lapsed on March 31 last year, but the Finance Ministry in May re-notified it till March 31, 2017.

The manufacturers have requested the Finance Ministry to further extend the exemption. Sandeep Chaturvedi, President of the Biodiesel Association of India, told BusinessLine : “The excise duty exemption is essential for the survival of this industry since none of the buyers will pay the additional amount. An additional 6 per cent burden will make it even more difficult to promote the fuel in India.”

Domestic biodiesel producers are worried as offtake tends to fall without policy support from the government. According to Chaturvedi, the National Policy on Biofuels, 2009 set a target of 20 per cent blending of biodiesel with diesel by 2017.

Due to a lack of approach to achieve the target, the industry has been batting for an amendment to the policy, he added.

The Ministry of New and Renewable Energy is working on a revised policy. Chaturvedi said since there is no updated policy to define sops for biodiesel producers, the industry is forced to approach the Finance Ministry every year.

The industry has requested a mandatory biodiesel blending target for oil marketing companies to promote the use of the fuel. This is similar to the 5 per cent biodiesel blending target specified in the interim Budget of 2014 by the Railway Ministry across 16 zones.

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